Plastics Manufacturing Co. is a manufacturer of automotive parts. Plastics' production process produces a substantial amount...

  

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Plastics Manufacturing Co. is a manufacturer of automotive parts. Plastics' production process produces a substantial amount of waste plastic that the company uses to produce small plastic items (such as tools and toys) for various customers. On August 1, 2019, Plastics received the following letter from Toy Distributing Co. Plastics Manufacturing One Industrial Drive, Los Angeles. "Dear Sir/Madam, We are entering into output contracts with a number of plastic manufacturing companies for the production of our line of plastic toys. Attached is a list of products we need, our specifications for the products, and the prices we are willing to pay for these items. We offer you an assured source of supply for your plastic by-product manufacturing which will eliminate the need for constant re-tooling of your manufacturing line. Please let us know which of these products you are willing to produce for us. Jessica Toy Toy Distributing Co. Bill Manager, production manager of Plastics, reviewed the list and decided to begin production of one of the items (a small plastic Car). He called Jessica and told her, "We plan to begin production on plastic Car. You should get the first shipment in about a week." Jessica told Bill, "We have had a number of companies that want to make that one, how many do you think you can produce?" After Bill told her that Plastics would probably produce 10,000 per week, Jessica said, "I think that we can handle that many but I can't make you any promises, the kids don't like plastic car as much as they used to. We will take your output for a while and see how these things are selling." After this discussion, Bill sent a letter to Jessica that set out the estimated amount and the price, but no other terms. Plastics spent $5,000 getting ready to produce the plastic cars and the next week began production. Through August, September and October, Plastics produced and shipped from 7,500 to 12,500 plastic cars each week and Toy Distributing promptly paid the contract price of $0.10 for each car produced. Jessica was so pleased with the arrangement with Plastics that she turned away other potential producers of the plastic cars that together would have produced about 10,000 per week. On November 1, 2019, Bill was approached by Big Co. Distributing. Big Co. distributes the Super Murphy Power Troopers line of children's toys - the hottest selling toys on the market. Big Co. was in a bind because they had underestimated the extraordinary demand for Power Troopers items. They offered to purchase all of the Power troopers' items that Plastics could produce for $1.00. Bill calculated that he could produce 10,000 Power Troopers toys each week for the same cost as the plastic cars He therefore entered into an agreement with Big Co. and shifted all his scrap file plastic manufacturing capacity to the production of the Power Trooper toys. When the next week went by without a shipment of the cars, Jessica called Bill and asked him where the shipment was. Bill told her that Plastics could not manufacture the cars until after the holiday season. Jessica told Bill "This creates a huge problem for me. I can't get plastic cars for $0.10 anywhere else. Would you be willing to make up the difference between what I have to pay someone else and what I would have paid you?" Bill said that Plastics would "consider making up the difference as a courtesy to you." After this call, Jessica entered a contract with another supplier. The contract required Toy Distributing Co. to purchase a total of 50,000 cars toys at $0.60each. When Jessica informed Bill of this contract he said, "We never expected the difference to be so great. The most we could possibly pay is $10,000." Jessica then said, "OK, we will see you in court," and hung up the phone. # You are required to examine TWO (2) possible claims that can be made by Jessica to Bill's company. Note: Use IRAC formula for answering. Contract Law Plastics Manufacturing Co. is a manufacturer of automotive parts. Plastics' production process produces a substantial amount of waste plastic that the company uses to produce small plastic items (such as tools and toys) for various customers. On August 1, 2019, Plastics received the following letter from Toy Distributing Co. Plastics Manufacturing One Industrial Drive, Los Angeles. "Dear Sir/Madam, We are entering into output contracts with a number of plastic manufacturing companies for the production of our line of plastic toys. Attached is a list of products we need, our specifications for the products, and the prices we are willing to pay for these items. We offer you an assured source of supply for your plastic by-product manufacturing which will eliminate the need for constant re-tooling of your manufacturing line. Please let us know which of these products you are willing to produce for us. Jessica Toy Toy Distributing Co. Bill Manager, production manager of Plastics, reviewed the list and decided to begin production of one of the items (a small plastic Car). He called Jessica and told her, "We plan to begin production on plastic Car. You should get the first shipment in about a week." Jessica told Bill, "We have had a number of companies that want to make that one, how many do you think you can produce?" After Bill told her that Plastics would probably produce 10,000 per week, Jessica said, "I think that we can handle that many but I can't make you any promises, the kids don't like plastic car as much as they used to. We will take your output for a while and see how these things are selling." After this discussion, Bill sent a letter to Jessica that set out the estimated amount and the price, but no other terms. Plastics spent $5,000 getting ready to produce the plastic cars and the next week began production. Through August, September and October, Plastics produced and shipped from 7,500 to 12,500 plastic cars each week and Toy Distributing promptly paid the contract price of $0.10 for each car produced. Jessica was so pleased with the arrangement with Plastics that she turned away other potential producers of the plastic cars that together would have produced about 10,000 per week. On November 1, 2019, Bill was approached by Big Co. Distributing. Big Co. distributes the Super Murphy Power Troopers line of children's toys - the hottest selling toys on the market. Big Co. was in a bind because they had underestimated the extraordinary demand for Power Troopers items. They offered to purchase all of the Power troopers' items that Plastics could produce for $1.00. Bill calculated that he could produce 10,000 Power Troopers toys each week for the same cost as the plastic cars He therefore entered into an agreement with Big Co. and shifted all his scrap file plastic manufacturing capacity to the production of the Power Trooper toys. When the next week went by without a shipment of the cars, Jessica called Bill and asked him where the shipment was. Bill told her that Plastics could not manufacture the cars until after the holiday season. Jessica told Bill "This creates a huge problem for me. I can't get plastic cars for $0.10 anywhere else. Would you be willing to make up the difference between what I have to pay someone else and what I would have paid you?" Bill said that Plastics would "consider making up the difference as a courtesy to you." After this call, Jessica entered a contract with another supplier. The contract required Toy Distributing Co. to purchase a total of 50,000 cars toys at $0.60each. When Jessica informed Bill of this contract he said, "We never expected the difference to be so great. The most we could possibly pay is $10,000." Jessica then said, "OK, we will see you in court," and hung up the phone. # You are required to examine TWO (2) possible claims that can be made by Jessica to Bill's company. Note: Use IRAC formula for answering. Contract Law

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1 Could Jessica claim that she has a contract with Pl astics for the production of 10 000 plastic ca... View the full answer